1. WBI S ERIES ON C ORPORATE R ESPONSIBILITY , A CCOUNTABILITY , AND S USTAINABLE C OMPETITIVENESS
Public Policy for
Corporate Social
Responsibility
July 7–25, 2003
Edited by
Djordjija Petkoski
World Bank Institute
and
Nigel Twose
World Bank Group
Jointly sponsored by
the World Bank Institute,
the Private Sector Development Vice Presidency of the World Bank,
and the International Finance Corporation

3. Contents
Preface……………………………………………………………………………………1
Introduction ……………………………………………………….……………………2
Responses to Topics………..…………..……………………………………………..3
E-Conference Participation ………………………………………………………….4
Summary of Each Week’s Discussion
Week I: The range of roles that governments play in providing an "enabling
environment" for CSR…………………………………………………………………..5
Messages from Participants……………………………………………………...11
Week 2: Exploring the alignment between public sector priorities and CSR activities
in the extractive industries …………………………………………………………….24
Messages from Participants……………………………………………………...27
Week 3: Understanding the relationship between CSR, trade and foreign direct
investment………………………………………...………….……….…………………43
Messages from Participants ……………………………………………………..47
Appendix
Comments by Participants about the E-conference……………………………………...57
Short Bios of Moderators & Commentators………………………………….…..……...58
Additional Online Resources Relating to Public Policy and CSR……….………………61
WBI E-Conferences on Corporate Responsibility, Accountability and
Sustainability……………………………………………………………………………..62

5. Preface to the Report
Corporate Social Responsibility (CSR) is the commitment of business to contribute to
sustainable economic development, working with employees, their families, the local community
and society at large to improve quality of life, in ways that are both good for business and good
for development.
Although the contemporary CSR agenda is maturing, the term “CSR” has not yet taken hold
within many public sector agencies, either in industrial or developing countries. Few
government initiatives have been undertaken explicitly as “pro-CSR initiatives” but nonetheless
many have contributed effectively to the promotion of greater social responsibility. For
example, the primary incentive of public sector activities that promote exports of sustainably
produced goods and services might well be to earn foreign exchange, but they still have a
positive impact by encouraging responsible production. Public sector agencies that do not use the
expression “corporate social responsibility” are not necessarily doing any less than those that do.
The challenge is for public sector bodies to identify priorities and incentives that are meaningful
in the local and national context and to build on existing initiatives and capacities. There is a
significant opportunity for public sector bodies in developing countries to harness current
enthusiasm for “CSR” alongside key public policy goals and priorities to encourage delivery of
results in both respects
This report aims to outline the proceedings, findings and recommendations of the global e-
conference “Public Policy for Corporate Social Responsibility” held from July 7 – 25, 2003. The
e-conference provided an opportunity for participants from all over the world to exchange their
thoughts and ideas on various issues related to the interplay of public policy and corporate social
responsibility.
The overriding need to deliver sustainable and equitable development underscores the
importance of achieving a better understanding of the role of public policy in relation to
corporate social responsibility and its potential to contribute to the development agenda. This e-
conference was just one step in building such understanding. Government and companies should
integrate consideration of such issues into their policies and business strategies as part of their
commitment to business ethics and corporate social responsibility (CSR). However, CSR is a
complex issue, with many players, definitions, and interpretations. Instead of focusing on finding
“correct” answers to often ill-defined questions, the real challenge is managing the dialogue
between various stakeholder groups, building coalitions for action and creating additional
learning opportunities through the implementation of sustainable action plans.
In addition to the participants, who through their written contributions had a critical impact on
the overall success and quality of the dialogue, expert moderators also played a key role by
providing background readings and guidance, thus maximizing knowledge transfer opportunities.
Special mention has to be made of Tom Fox, Michael Warner and Regina Abrami. Mehmet Can
Atacik and Amanda Blakeley assisted in the preparation and writing of this report.
Djordjija Petkoski Nigel Twose
World Bank Institute World Bank Private Sector Development
Private Sector Development CSR Practice
1

6. Introduction
The global e-conference on Public Policy and Corporate Social Responsibility (CSR), July 7 –
25, 2003, was organized jointly by World Bank Institute (WBI) and Private Sector Development
Vice Presidency of the World Bank. The main objective of this online dialogue was to provide
an opportunity for participants from around the world to share their expertise and ideas on ways
in which the public sector can promote and support CSR activities in the developing world, and
to develop action-oriented recommendations for policy-makers. An expert team of international
moderators provided weekly topics, background readings, discussion papers and overall helped
to guide and focus the e-conference debate.
The first week of the e-conference focused on the range of roles that governments play in
providing an "enabling environment" for CSR. CSR covers a wide range of issues relating to
business conduct, from corporate governance and environmental protection, to issues of social
inclusion, human rights and national economic development. In the case of private sector
investment in low and low-middle income countries, the emphasis placed on each of these issues
can vary, and sometimes differs from the priorities of investors and businesses in more
developed markets.
The role of the public sector in CSR is complex and is an emerging field. As the term “CSR” has
not yet taken hold in many public sector agencies, many of their interventions have not been
undertaken explicitly as CSR initiatives, but nevertheless could be seen as part of the CSR
agenda. There is therefore a wealth of relevant experience among public sector agencies that is
currently being overlooked.
During the second week, participants explored the alignment between public sector priorities and
CSR activities in the extractive industries. The extractive industry sector, specifically upstream
oil, gas and mining companies, typically involve large multinational enterprises operating in a
country over the course of several years, sometimes decades. Operations involve large-scale
capital investments, construction activities requiring significant labor inputs, both global and
local sourcing, and long periods of facilities management. Tax and royalty revenues are often
substantial but deferred, and though they offer an economic opportunity can also be a catalyst for
poor governance.
Interest is growing in the potential coincidence of public sector priorities and the CSR activities
of business, not least with regard to the social and environmental management practices of
upstream extractive industries. This begs the question: how can public policy be formulated to
strengthen this alignment, whilst ensuring that the resulting interventions are both ‘optimal’—
good for both business and development—and ‘feasible’—in relation to the institutional
constraints of public sector agencies and the value drives of business.
The final week of the conference helped build understanding of the relationship between CSR,
trade and foreign direct investment. More and more companies are wondering what the link is
between their CSR strategies and their trade activities from both the import and export
perspectives. Multinational companies are exporting not only their products and services, but
also their operating standards, best business practices, values, and principles, i.e. codes of
conduct, all over the world. Many of these practices are increasingly being adopted by domestic
2

7. enterprises. Progressive corporations and financial institutions view CSR and sustainable
investments as a competitive advantage or a minimum requirement for risk mitigation.
Governments are beginning to view CSR and codes of conduct as a cost-effective means to
enhance sustainable development strategies, and as a component of their national
competitiveness strategies to compete for the “right” type of FDI inflows and to position their
exports globally. For example, the US-Vietnam textiles agreement signed in May 2003, includes
an obligation for the Vietnamese authorities to encourage implementation of CSR codes, in
return for access to the US market, which is now the top export market for Vietnam, after only
two years of formal trade relations. This appears to be the first time that an international trade
agreement has included a government obligation to encourage CSR codes, as opposed to the
more typical language requiring additional regulation or enforcement. The US-Cambodia textiles
agreement also included an obligation to raise labor standards with the incentive of an increased
trade quota for products manufactured in line with labor guidelines.
Responses to Topics
The global e-conference generated numerous responses to the weekly topics raised. Detailed
analysis indicates that participants raised a variety of interesting questions and suggestions
relating to role of public policy in promoting socially responsible corporate behavior as framed
by the questions of the week. The following list suggests the scope and breadth of the substantive
issues raised:
There was general agreement on the following points:
The term CSR can be interpreted in a wide range of ways
CSR represents a new mind set about the changing role of business in society
Practices of corporate responsibility will show variance, there is not a one size fits all
solution.
Government and businesses should consider the following when forming CSR policies::
o History, culture
o Business climate
o Public awareness
o Government
and take into consideration the constraints and responsibilities of each stakeholder, and
the potential actions each one can carry out in the context of these components
Policy and decision makers should demonstrate flexibility on who should take the lead
Some of the concrete recommendations from the e-conference were:
Creation of a CSR board-that includes government, civil society, business and academia
at country or regional level
Tax incentives-for sharing the public service burden
Legislative incentives-requirements from corporations that would provide incentives and
benchmarks
Governments can serve as exemplary institutions though by using socially responsible
procurement and personnel recruitment practices
Transparency at all levels in each stakeholders practices
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8. E-Conference Participation
This was a truly global meeting of minds, with 495 e-conference participants from 74 countries
representing a broad range of stakeholder groups including CSR professionals, corporate
executives, academic researchers, educators, members of multilateral institutions and educational
civil society organizations, and students. The most active countries in this e-conference were
Brazil, India, Kenya, Nigeria, Columbia, Former Republic of Yugoslavia, the United Kingdom,
and the United States. The different regions were represented in the following way:
Africa: 80 participants from 13 countries
Eastern and Central Europe: 71 participants from 14 countries
Latin America and Caribbean: 31 participants from 11 countries
Middle East and North Africa: 7 participants from 4 countries
Australia and Oceania: 13 participants from 2 countries
North America: 107 participants from 2 countries
East Asia and Pacific: 85 participants from 12 countries
South Asia: 8 participants from 2 countries
Western Europe: 94 participants from 15 countries
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9. E-Conference Proceedings
To read the complete discussion, please visit:
http://vx.worldbank.org/cgi-bin/lyris.pl?visit=public-policy-csr
Week I. The range of roles that governments play in providing an "enabling
environment" for CSR
CSR covers a wide range of issues relating to business conduct, from corporate governance and
environmental protection, to issues of social inclusion, human rights and national economic
development. In the case of private sector investment in low and low-middle income countries,
the emphasis placed on each of these issues can vary, and sometimes differs from the priorities
of investors and businesses in more developed markets.
The role of the public sector in CSR is complex and is an emerging field. As the term “CSR” has
not yet taken hold in many public sector agencies, many of their interventions have not been
undertaken explicitly as CSR initiatives, but nevertheless could be seen as part of the agenda.
There is therefore a wealth of relevant experience among public sector agencies that is currently
being overlooked. The following table categorizes possible government interventions regarding
CSR.
Public Sector Roles
‘Command and control’ Regulators and Legal and fiscal
Mandating
legislation inspectorates penalties and rewards
‘Enabling’ legislation Creating incentives Capacity building
Facilitating
Funding support Raising awareness Stimulating markets
Stakeholder
Partnering Combining resources Dialogue
engagement
Endorsing Political support Publicity and praise
For market-driven CSR issues, such as directors’ pay, public sector agencies may elect to adopt a
laissez faire approach or facilitate voluntary codes. CSR issues for which the market drivers are
weak—where there is no clear business case—may suggest a stronger role for the public sector
to create incentives. This might include as regulatory reform or the negotiation of strategic
alliances with business or civil society, based on a sharing of the costs and risks.
In low and low-middle income countries, interest is increasing in the possible alignment of the
public good outcomes of CSR activities with public sector priorities. For example, developing
country governments are beginning to view CSR activities as a means to enhance sustainable
development strategies, as a component of their national competitiveness strategies to compete
for foreign direct investment and to position their exports globally, and to improve poverty-
focused delivery of public policy goals.
5

10. Moderator: Tom Fox, Research Associate, Corporate Responsibility for Environment and
Development Programme, International Institute for Environment and Development
Commentator: Susan Aaronson, Senior Fellow and Director of Globalization Studies, Kenan
Institute, Kenan-Flagler Business School, University of North Carolina
Background readings:
“Public Sector Roles in Strengthening Corporate Social Responsibility: A Baseline Study”, Tom
Fox, Halina Ward, Bruce Howard, International Institute for Environment and Development
(IIED), October 2002
“Developing Value: The Business Case for Sustainability in Emerging Markets”, SustainAbility,
the International Finance Corporation and Ethos Institute, 2002
“The Role of Government in Advancing Corporate Sustainability”, A Background Paper
prepared by David V. J. Bell, April 2002
“Third Generation Corporate Citizenship”, Simon Zadek, The Foreign Policy Centre and
AccountAbility, March 2001
“Public policy and voluntary initiatives: what roles have governments played?”, OECD Working
Paper on International Investment no. 2001/4, February 2001
“Government and Corporate Social Responsibility: An Overview of Selected Canadian,
European and International Practices”, Canadian Business for Social Responsibility, 2001
"Why A Role for Government?", National Policy Association
"CSR Public Policies", National Policy Association
"Comparing Approaches to CSR: What Is Best for Canada?" Anne Golden, The Conference
Board of Canada
Key Questions Asked of Participants:
1. How is the public sector relevant to the CSR debate?
2. What are the public sector drivers for strengthening CSR?
3. To what extent is the public sector already undertaking “pro-CSR” activities, without
realizing it? Does this matter?
4. What are the complementarities and the tensions between public sector interventions and
private sector engagement in CSR? How do you strike the balance?
5. Does civil society have a role to play in supporting an enabling environment for CSR? If
so, how can the government facilitate this?
6. What, if any, role does CSR play in strengthening national economic competitiveness?
How might national and local governments include CSR in the design of competitiveness
policies?
7. Is CSR also relevant for small and medium sized enterprises (SMEs), both as individual
competitors in the marketplace and as part of global supply chains? What happens to
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11. indigenous companies as CSR codes of conduct become more stringent? Whose
responsibility is it to ensure they are able to respond to these pressures/new
requirements?
Summary:
The first week, from July 7-11 2003, addressed "the range of roles that governments play in
providing an 'enabling environment' for CSR". There was relatively high participation in the
discussion, typically with around thirty submissions per day. Discussion remained at a fairly
conceptual level, but some participants referred to particular examples or experience. Some key
themes emerged, including some that were not given particular emphasis in the above questions -
most notably the role of education in enabling CSR. This perhaps reflects the participation of
many academics and teachers in the discussion. There follows a brief summary of the discussion
under key themes. This summary is not exhaustive and the moderator recommends readers to
refer also to the daily summaries and individual submissions where possible.
DEALING WITH COMPLEXITY: DEFINING CSR AND MEASURING PERFORMANCE
Many contributors stressed the complexity, breadth and depth of CSR in terms of topics, actors,
contradictions and dilemmas. Some warned against seeing the 'public sector' and 'enterprises' as
homogeneous categories, noting the need to recognize the distinctions between public sector
agencies at national, regional and global levels, and also between different types of enterprise,
from SMEs to multinational corporations. There was some
discussion whether particular topics should be regarded as part of the CSR agenda (e.g.
disability, HIV-Aids), and a suggestion that it would be useful to systematically map out the
diverse CSR 'territory' as best as possible. There was a call to participants to attempt to develop
a working typology of activities that could be used by researchers to measure CSR activities in
different countries. Many other participants expressed an interest in such collaboration, some
stressing that any framework needs to be flexible so as not to stifle innovation. It was suggested
that it could be based on Carroll's four main dimensions of CSR (economic, legal, ethical and
philanthropic) within a framework such as the balanced scorecard. Some contributors noted that
various CSR standards and measures already exist, and that it is necessary to recognize the
difference between management/process standards such as ISO14001 and performance-based
measures when measuring companies' activities.
THE NEED FOR LOCALLY SPECIFIC CSR
It was suggested that there should be more research on country-level conditions that shape the
role of business in society, to get away from the current emphasis on research that focuses on
OECD countries. It was stressed that CSR is viewed differently around the world, and this
depends on cultural and historical circumstances - which means that locally-specific and
culturally sensitive solutions are required. For example, in the EU
accession countries, discussions on CSR are linked to a redefinition of the boundaries between
public and private responsibilities, and defined by a low level of understanding of CSR,
particularly within local government. It was noted that approaches to CSR would depend on the
orientation of the government and on the level of business influence on policy. There was a call
for greater emphasis on defining and implementing CSR (for example, in corporate reporting) at
the local level rather than from the global level.
Various participants proposed context-specific national guidelines on CSR, against which
companies' CSR activities and performance could be compared. One contributor noted the
difficulty of achieving this, particularly given the difficulty of defining and measuring against
7

12. social indicators, but recognized that some companies are making efforts to measure and
implement CSR at the local level. It was noted that this is often where the dilemmas start, as
what appears to be a straightforward policy (e.g. no child labor) becomes more complex when
the local context needs to be taken into account.
DOES THE PUBLIC SECTOR HAVE A ROLE TO PLAY?
There was general agreement that the public sector does have a role to play, and it was suggested
that the type of CSR that emerges is shaped by the roles that the public sector plays. Some
participants noted that government has generally adopted CSR only in a reactive way, for
example in response to requirements in export markets, rather than with a more proactive stance.
Where there are questions of corporate accountability, it was suggested that public sector
engagement is particularly crucial. Many contributors argued
for partnerships and synergy between the public and private sectors, although it was stressed that
this would only work when public sector officials do not feel threatened that their roles are being
taken over by the private sector. In order to establish under what circumstances partnerships can
work, it was suggested that there is a need to define
carefully where immediate cooperation is possible, and where conflict of interest is inevitable.
WHAT ROLES SHOULD THE PUBLIC SECTOR PLAY? Many submissions suggested that
where companies do not appear ready to engage with CSR, government needs to take a lead.
Suggestions included: ·Ensuring effective governance and a business environment that
encourages CSR. This means that the government needs to provide a functioning legal and
regulatory structure, and effective delivery mechanisms for public services.
Setting up a special 'board' or agency with a remit of encouraging CSR and monitoring
the CSR activities of both the public and private sectors, and to ensure that CSR is not
'tokenistic'.
Clarifying expectations of business with regard to CSR, and developing ways of
measuring their responses to these expectations.
Leading by example, e.g. through procurement and raising investors' awareness
Eliminating bribery and corruption and encouraging transparency in relations between
government and business, particularly related to payments made in return for access to
natural resources such as oil and minerals. Promoting transparency at local government
level, and tackling the corporate lobbying of government.
Providing tax benefits and other mechanisms so CSR is seen by companies as a benefit
rather than a cost. For example, this could include tax exemptions for companies that
build social capital by working with local communities as part of their core business.
Creating a vision and strategy for CSR, and allowing businesses to work with the
government towards that strategy.
Focusing particularly on the gaps in the current CSR agenda – particularly how to work
with small and medium-sized enterprises (SMEs), and how CSR can be made to work in
countries with poor information and a lack of capital.
Applying the Local Agenda 21 process to involve local companies in implementing CSR.
ADDRESSING A LACK OF PUBLIC SECTOR CAPACITY
Many contributions stressed that not all governments have the capacity to engage with CSR, or
even to establish a functioning legal and regulatory structure, particularly in developing
countries. This means that the desired partnership approach may just not be possible. Where this
8

13. is the case, some contributions suggested that business has a role to play in supporting the public
sector. In order to allow this, government needs to set clear public policy objectives, then
encourage CSR activities by businesses that contribute to those objectives. But first, there is a
need to define what is socially responsible, now and in the future. One contributor warned that
only the public sector has the necessary overview and understanding of social objectives to be
able to shape CSR, and that governments should not give legal authority to non-elected private
groups to establish their own standards of CSR. It was noted that both the public and the private
sector sometimes fail to implement their policies and statements related to CSR, and that what is
needed is political will.
BUSINESS DECISIONS, INCENTIVES AND DRIVERS
Some participants suggested that expecting company managers to maximize shareholder value as
well as aiming for 'vague' social and environmental objectives (as opposed to adhering to clear
regulations and laws) makes them unaccountable for their actions, and potentially allows them
simply to act in their own self-interest. There was some discussion whether shareholder value
and social and environmental goals are in line with each other - whether there is a "business
case" for CSR. One participant described a commonly held view among business leaders, that
adhering to social and environmental standards will harm their competitive position. Another
doubted whether there is necessarily a causal link between environmental/social performance
and financial performance, and called for an open acceptance that in some cases there will be
'win-win', but also 'win-lose' situations - at least in the short run. It was suggested that in the long
run, the public will "endow a host of goodwill on the firms that have CSR in their agenda", and
one participant pointed to research that suggests that there is a positive relationship between CSR
and financial performance, based on US and European data.
A common thread throughout the discussion was the need for the public sector to create the right
incentives for responsible action by enterprises. One contributor warned that it is difficult to
convince businesses to take part in project-based partnerships, and observed that they will only
do so if it is in their financial self-interest. Another suggested that the role of the public sector
should be "to provide incentives that encourage the focus to be on long-term sustainability not
short term profit gains". Where there is no 'business case' for CSR (i.e. adopting CSR would
make an enterprise less competitive) then a variety of incentives could be created to make CSR
in its financial interest. Such incentives may be created by government (e.g. through subsidies,
tax rebates or penalties) or civil society pressure. It was also suggested that CSR should be
linked to corporate risk management.
DRIVING CHANGE AND SHIFTING THE BUSINESS MINDSET
It was suggested that the adoption and mainstreaming of CSR may follow the experience of
Quality Management, which was met with skepticism at first but gained broader acceptance as it
was increasingly recognized as an essential part of running a prosperous business. One
participant highlighted the difficulty of establishing partnerships given entrenched assumptions
that companies hold with regard to governments, and vice versa, and the need to work for a
"mindset shift" to allow successful partnerships and dialogues.
There was a warning of the danger of CSR being used simply as a tool for brand promotion, and
a call for a more fundamental paradigm shift towards 'spiritually guided business', from which
CSR would follow. Both government and civil society may need to be involved in bringing a
change from the current business mindset - perhaps using the concept of CSR itself as a basis. It
9

14. was suggested that change needs to be context-specific and driven at grassroots level, and that
top-down attempts to introduce CSR will not
work.
THE ROLE OF EDUCATION, INFORMATION AND SHARING EXPERIENCE
Various contributors stressed the importance of CSR-related education, noting that it could build
capacity, promote interaction between different actors, demand good governance and track
public sector performance, and take into account local culture and identities. Many participants
argued that CSR, business and public ethics should be a central element in the academic agenda,
both for MBAs and in other disciplines. Others emphasized the need to think beyond the formal
tertiary education sector, starting CSR-related education well before university level, and
continuing to educate business leaders beyond formal education. There was a call for educators
to be flexible and open-minded, and to involve the private sector in education on CSR.
Other types of information sharing were also identified as important. One participant suggested
that public sector agencies could usefully initiate learning and exchange of good practice
between diverse communities and locations. It was suggested that technology and
telecommunications could promote transparency, both in terms of public sector policies and
activities, and by internationalizing the 'peer pressure' that encourages
enterprises to act responsibly.
THE ROLE OF FOREIGN GOVERNMENTS AND MULTILATERAL INSTITUTIONS
It was suggested that foreign governments and multilateral institutions should link their support
to CSR by only investing in projects that involve companies that are practicing CSR. This would
force governments to establish mechanisms to encourage the private sector to implement CSR.
Foreign governments could bring CSR into their aid and trade policies, and support developing
country governments to improve governance, to enable them to establish a 'social compact'. One
participant suggested that where there is limited enforcement of legislation, it is important for
multilateral institutions to act as external checks or monitors of both member states and
multinational companies.
THE ROLE OF CIVIL SOCIETY
Many submissions related to the role of civil society in supporting an enabling environment for
CSR, and how the public sector could facilitate this. Generally, it was agreed that civil society
organizations have a strong role to play. One participant described how segments of civil society
(including media, NGOs, academics and the church) can engage with CSR, and called on each of
these groups to 'walk the talk' by demonstrating their own social responsibility and
accountability. Civil society organizations may be able to act as a 'bridge' between companies
and government and who can 'translate' the terminology of social development into language that
business can understand; they can also provide information on enterprises' activities to the
public.
It was argued that effective civil society needs the support of the public sector and good
governance. Government may be able to coordinate partnerships between businesses and
appropriate civil society organizations. However, it was also suggested that there is a special
need for civil society action in countries with governance failures or where public sector capacity
is weak - for example, to act as a mediator between government, citizens and companies. Civil
society itself may be able to support government capacity to deal with CSR where this is lacking.
10

15. CSR AND NATIONAL ECONOMIC COMPETITIVENESS
One contributor suggested that a key driver for strengthening CSR is to attract 'quality' foreign
investment, and that CSR can provide an attractive marketing flavor at national level. Another
agreed that responsible business activity creates a better environment for doing business and
promoting social development, which is conducive to medium- and long-term investment.
However, others disputed that CSR could help developing countries in terms of competitiveness,
given that their competitive advantage at present is primarily based on low costs. One participant
described a commonly held view among business leaders, that enterprises operating in
developing countries should not be expected to adhere to social and environmental standards that
developed countries did not follow at earlier stages of their development.
SMEs AND INDIGENOUS ENTERPRISES
It was suggested that SMEs should be held as accountable as larger enterprises with regard to
their operational activities, but that engaging SMEs in CSR is a challenge, particularly in
developing countries. The following approaches were suggested:
Creating incentives for SMEs to adopt CSR, perhaps through fiscal incentives or as part
of Poverty Reduction Strategies as promoted by multilateral institutions.
Public funding for partnerships and 'learning networks' between SMEs in the North and
South.
Partnerships between SMEs and larger companies.
Public promotion and subsidy for the adoption of CSR standards such as SA8000.
Linking CSR to public procurement from SMEs.
MESSAGES FROM CONFERENCE PARTICIPANTS
The idea that governments should establish policies that support, facilitate,
or enable corporate social establish in any way is undemocratic and counter
to the principals of good government. I have no objection to consumers
deciding not to buy products of a certain company because they do not approve
of the company's operations for whatever reason. Similar I have no objection
to investors refusing to buy the stock of a company for whatever reason. What
I strongly object to is the government giving legal authority in any form to
private groups to establish and enforce their standards of corporate
responsibility. The private groups that have created these standards have not
been elected by the public and should have no legal authority or help from
the government to enforce these standards. If democratic governments
following the wishes of the public determine that private companies should
behave in certain ways, these governments can enact the necessary laws that
regulate the behavior of private firms. This is done all the time, for
example, laws that set minimum wages, establish safe working conditions,
protect the environment and so forth. It is the proper role of a democratic
government elected by the people to establish standards of conduct for all
citizens and companies. Governments have no right to give unelected private
groups the legal authority in any form to set and enforce standards of
behavior for either individuals or companies. Robert, USA
I believe that in addition to peer pressure we need role models, too. An
example from my country is our First Lady who is leading a partnership
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16. project (btw public sector and NGOs) in upgrading educational level of
society.
I agree with the views on hardships confronted in coordinating such
partnerships, however, best way to resolve them is to analyze reasons
for partnerships. Public sector officials need to be convinced that
the aim of partnerships are not mainly to replace what they alone
are providing. Given the threat they feel due to privatization
programs, this is crucial. Additionally, the reasons for partnership
may be various. It may be to complement a service provided by public
organizations, or it may be to diversify a service provided. In case
partners understand this, they may be more positive in running
partnership projects. Semra, Turkey
I see CSR as a term that is not far from the lips of Chief Executive Officers
to the extent that whenever Vision/Mission statements are written the term
CSR is always an integral part of such statements; but the funny thing is
that they don't simply lift these statement off the wall for implementation.
However, setting the minimum standard for Corporate Social Responsibility is
one dynamics that shouldn't be left in the doorsteps of the government
because in third world countries, governments don't always live up to the
expectations of the electorates or the subjects (in the case of military
rule). According to the maxim "Nemo dat Quod non abeit" meaning you can not
give what you don't have. The contemporary third world government need to put
in place a working infrastructure that will engender business activities. It
is after then that the corporate world could be called upon to give back to
the community that provided good business environment. Bolaji, Nigeria
it seems to me that the idea of a single entity owning CSR, be it state or
business or something else, will not be effective and therefore will not
work. It would be better to allow equal responsibility for CSR initiative to
any entity willing to partake and that we all should
allow the natural emergence of this phenomenon, after which we can reach
consensus (not negotiate). The message to go out therefore should be that
anybody or any structure will be allowed and welcome to participate in CSR at
any time.
However, the above paragraph assumes a single level of CSR. It is my
perception that the fidelity of CSR should be structured to allow different
levels of "attachment" if you like. This essentially relates to the fidelity
of CSR in the sense that should one consider the possible government roles
posed by Tom Fox it is not difficult to see that not all governments van
actually govern to that fidelity.
As far as implementing CSR in developing countries, I would like to suggest
that in the light of recent World Bank studies, one should start with the
most important aspect first and then do the next important aspect. This
refers to the primary objective of implementing an effective government
delivery system. Because one might say that if no delivery exists, then no
CSR is needed. This will ensure compatibility with investors and multi-
nationals and it will set the scene for local industrial participation, be it
business, labor or civil society including churches (religious groupings).
This will allow the comparison of governments (which is seen as big
businesses) e.g. South Africa's value for the tax dollar is 30% and New
Zealand's value for the tax dollar is 70%. Johan, South Africa
12

17. The Kenyan national government needs some serious support to provide the
environment that encourages businesses to meet some basic minimum standards,
let alone all singing all dancing CSR. Not only that, but
big businesses are sometimes actually the ones providing the examples,
financing and support to help the government to start to function properly!
Its not about how government can help to enable CSR, but more
about how business can help GSR (government social responsibility!).
First, in terms of a developing country government providing an enabling
environment (as in Kenya) there has to be a focus on clear, workable laws
that can be enforced and that companies are encouraged to adhere to. In Kenya
there is little or no incentive to pay the minimum wage or to adhere to
pollution laws because either the regulators are non existent (i.e.
environmental inspectors), the law is so complicated
and out of date (i.e. minimum wage) or there are few examples of successful
prosecutions within Kenya of businesses breaking the law. So the first role
of the government in a developing country situation has got to be about
providing a functioning legal and regulatory structure.
Second, there is that old debate as to the role of the state, society, and
capital…. who does what in a functioning and fair society? Ideologically I
guess it depends if you are a capitalist, a communist, a communitarian, a
liberal etc… But practically this is an important question in terms of what
CSR actually covers in developing countries. In Western countries where there
is free education, free (or relatively
free) health care and some form of social security there is less of a
question and business can get on with CSR activities over and above basic
human needs. But in Kenya companies are taking an active interest in health
care because 30% of Kenyans have HIV/AIDS. Companies are providing awareness
campaigns, condom distribution, counseling, medical care even anti-
retrovirals to workers. Is this CSR? - or is such investment misplaced
because such companies should instead be investing in government in order to
enable government to be able to create a good health care system for its
people?
Therefore the second role of the government has got to be about mapping out
the level of its ambition in terms of educational, health care, job creation
and social security provision (development) and working as a
partner with business to deliver those aims.
The third point, is that it is actually part of CSR that companies actively
engage themselves in developing a fair and functioning government in the
counties within they operate. Multinationals publicly say that they take a
hands off approach to government, that is ‘political’, that is for the
government to decide, that it is not for companies to get involved in the
functioning of the state…. But the very fact that companies operate in
developing countries means that
they are already involved, companies pay taxes, apply for concessions, employ
people etc Companies need to get involved especially where there are huge
revenues being generated as is the case with oil production.
Some sort of governance package needs to go with such huge revenues because
it has been shown (especially in Africa) that this wealth generated by
business can easily lead to corruption and conflict . At the very least there
should be transparency that shows how much money flows from oil companies to
host governments the "Publish What You Pay" campaign and disclose all net
taxes, fees, royalties and other payments. Laura, UK
13

18. As an anthropologist looking into this phenomenon called CSR, the term
"culture shift" holds promise. But what exactly do we mean by "culture
shift". Both public sector as represented by the government and private
sector as represented by business capital in themselves are nebulous
terms. These entities are not monolithic structures nor their function
mutually exclusive. Firstly, if we are to include centrally planned
economies, the term public sector will be even more fuzzy as the state
itself is engaged in activities that are normally undertaken by free
enterprise economy. The important question therefore are: which part of
the public sector needs to undergo "culture shift" and in which direction
should the shift go. Is the current trend of globalization, free trade,
deregulation and privatization the kind of culture shift that one envisions
to promote or support CSR? Is the promotion of greater transparency and
accountability as part of governance enough to encourage the business
community to adopt CSR?
I agree that participation of both the public and private sector is
important. However, there is a need to define the areas where immediate
cooperation is possible or where conflict of interest is inevitable. One of
the areas where competition and conflict is likely to occur is in the areas
of natural resource management. For instance in forestry and mining, the
conflicting claims of various stakeholders have resulted in tension between
the Indigenous People who has different concept of resource management and
the modern and capitalist oriented stakeholders whose view of natural
resources is different. In
most case, the government is ambivalent, in some of its policies. On one
hand, they seek to protect the rights of the Indigenous People and on the
other hand providing policies that permits exploitation of said resources to
the detriment of the Indigenous Peoples. Ruben, Asian Development Bank
It has been a trend that corporate citizenship has been the life of
multinationals, so also with corporate social responsibility. Detached from
local communities the multinationals have been running the game with a "busy-
ness" for own profit - within a short-term perspective.
Now we see that multinationals role as exploiters of local resource - man and
land - has reached to a level of madness. The fact that long-term
perspectives of development and the duty to create value and to nourish life
- are the imperatives for survival and to contribute for a better future.
The global challenges are of such a kind that the partnership between
private and public sector is indeed needed. The new trend of CSR has emerged
from the grassroots of "nature activists" -> multinationals -> influencing
governments-> setting the standards and supporting structures for SMEs
operating on a very local market. CSP can be defined as a growth point in any
society, where we have seen that innovative companies have learned that to
save energy or waste management is not only an environmental action – but
good business - circular economies demands new measurements for economical
performance and we need renewal to measure this.
Sustainable policies and legislations comes more and more into praxis, and
many companies not understanding these new imperatives might in fact not have
a market in the future. The dynamic of inner will to be a sustainable
enterprise is a key to the future markets. Looking at the trend of the
sustainable Dow Jones index is maybe setting the scene for the future more
than governmental policies. The international financial market might adjust
14

19. to the reality faster than governments? The triple bottom lines of measuring
profit, social and environmental performance are entering into more and more
leaders mind-set, for sure closer to common sense now than before, however
impossible to opera without interaction with the local community...and the
global! Look at what
has happened to Coca and also Nike sweatshop labor. In such cases, poor CSR
performance poses a risk to reputation and brand. So how can local public
institutions welcome this kind of interaction?
Today we need to set focus on micro and SMEs anywhere in the world to take
part in this new trends, and to increase the partnership across different
economical zones of the world and within mega-cities/regions. How can public
institutions and the World Bank support the eco - or sustainable innovations
in enterprises operating in a less information rich societies with less
capital to adjust to a more sustain future? What are the incentives to offer
and how will you do the campaign to address this on a broader scale than
today? Stenseth, Norway
I would suggest three roles that the public sector can play, enforcer,
facilitator and leader by example.
I am quite skeptic about the enforcing role, in my opinion laws and
regulations will only drive businesses and public sector further away from
each other. Considering the complexity and scale of problems related to CSR
(i.e. environmental problems & social divides) cooperation between these two
sectors is vital, as was illustrated in other postings. I like the comparison
between CSR and quality management. QM is not enforced by law, but an
enormous amount of corporations has realized that to stay in business and to
prosper they need to produce top quality. Like CSR QM was at first met with
great negativity. After a while it became more interesting but still only
relevant for the quality department. By now successful companies have
realized that quality is relevant throughout the entire organization. I
suspect (hope) CSR will evolve much in the same fashion (a bit faster would
be nice, but change unfortunately takes time to be effective)
The facilitating role seems very promising. In the Netherlands (my
home country) the government is creating a center of expertise to support
businesses and NGO's alike. Also the thought that Stenseth offered seems to
fit into this role, transferring best practices from one nation to another
and involving students. In my opinion education is a crucial factor in
creating a CSR-minded culture. If we really want to change the way global and
local corporations go about their business we should start by educating the
managers of the (near) future. A great quote from a Dutch organization (DHO)
is:
If you are thinking one year ahead sow a seed,
If you are thinking 10 years ahead plant a tree,
If you are thinking 100 years ahead, educate people.
Jeroen, The Netherlands
You cannot enforce CSR by rule, but you can use ‘peer pressure’. I am sure
those companies that you have ‘named’ will be shamed. Thanks to the internet,
we can find out what is doing in other countries, and this will enforce
companies to be more honest!! Janet, Poland
15

20. What I have found to be interesting in my discussions with other
colleagues in the CSR field and business participation in Africa,
especially with reference business influence on national policy issues in
South Africa and the rest of the continent is different. This will
probably assist in terms of understanding how partnerships and policies on
CSR between corporates and government could be forged.
In the African context, it should be noted that governments still wield a lot
of power (political), which creates uncertainty for investments and
subsequent lack of corporate influence on policy. However, when one looks at
South Africa comparatively with other African states, it would be noted that
businesses have had influence on government for quite sometime. On that note,
I would like to highlight that in most parts of Africa it would be very
critical that there is government and public participation on CSR policies,
of which local and international businesses in that country should be part
of. Nkosithabile, South Africa
Even though Colombia faces an internal threat by the illegal armed
groups such as FRAC, ELN or paramilitary, which are mostly financially
fed by drug traffic; and considering that a huge part of the national
budget, which include a recent tax imposed to private sector, is
destined to finance the national army in order to control this terrorist
groups, government has not yet realized that part of the solution for this
problem could be driven out with the consolidation of CSR by the private
sector.
There is an important company that produces vegetal oil, which is located in
the middle of the Colombian territory, zone in which also confluence the
above mentioned groups. During many years this area was no ones land, and the
industry was going bankrupt. That company, wisely observed that they could be
part of the solution and started a intense work with the community, providing
them the opportunity to have an active participation on the production,
making them co-owners and giving to their families attention to their basic
needs. As a result of such approach, that zone is now a peace territory and
illegal armed groups were expelled definitely by the community.
With this example I just wanted to drive your attention about how CSR
can promote peaceful living in zones where government has never being
present. A big driver for Colombian government to promote CSR is the
construction of peace. Government should give tax exemptions to those
companies that build social capital, companies that invest in the
community. That will induce a direct impact on the accounting balance.
As a middle developed country Colombia still needs to reinforce the role that
private sector can play in promoting development and in that sense foreign
governments and multilateral institutions should invest in projects that have
a strong participation of private sector complying with CSR. The projects
must have a permanent joint work between public institutions and private
sector companies. If Multilateral institutions condition their support to
the application of CSR, governments will be forced to establish the necessary
mechanisms that will induce private sector to implement CSR. Harvey,
Columbia
I'd like to reply to Janet's question as to what governments can do to
16

21. Create this enabling environment. Tom Fox's paper (the required reading for
this week) has a model for the types of activities gov't can take. While at a
Washington think tank, my colleague James Reeves and I did a study of what
the Canadian, EU, British, and US governments have been doing. They have
strikingly different approaches. I think governments must first define what
global CSR means. There must be a shared notion of "ethical behavior." The
second step is to link CSR enabling strategies to policies (in foreign aid,
trade, at the ILO and World Bank etc....that promote both the rule of law and
adherence to international standards. THIS IS KEY. Finally, governments
should try a
wide variety of strategies: such as using transparency/disclosure to
encourage CSR reporting and help move markets; developing incentives or
preferences; utilizing procurement policies; or convening multi-stakeholder
dialogues. But to repeat the most important thing governments can do is to
help developing countries put in place a "social compact" This takes money--
the government must offer resources to improve governance systems worldwide.
Susan, USA
Although CSR as part of a corporate strategy might provide competitive
advantage to SMEs, do they want to? CSR makes financial sense to a
multinational corporation whose stock value can be greatly affected by a bad
reputation of social and environmental injustice. But SMEs that are in a
country that does not have a strong social and environmental public policy
may not feel the need to do comply with CSR unless it is proved in beneficial
in financial terms. Should CSR be promoted then through tax break incentives
like Mr. Harvey Rodriguez suggested; or should it be promoted in public
policy as part of private sector development strategies for poverty
alleviation designed by the public sector in aid of other international
institutions like the World Bank? Rina, Canada
Unfortunately, particularly in third world countries, the popular yearnings
of the people is exactly the opposite action plan of governments. Now that
this is established, it behooves on the civil society to regulate in the most
peaceful manner (unlike what obtains in Nigeria where Natives of crude oil
regions abduct, kill or foment violent troubles) the expected level of
responsibilities of companies in terms of CSR.
Unfortunately however, it is rather difficult to reach a consensus on the
modus operandi of achieving this (simply because of the level of literacy and
poverty in the third world countries). A giant stride towards the right
direction is effective orientation and awareness on the part of everybody;
after which all other variables will fit into place. Bolaji, Nigeria
The initiative of the World Bank in promoting CSR could become one of the
most important contribution in the development of our countries.
I am from Venezuela and I recently moved to Mexico where I live at the
present time. The example of the benefits of CSR given by Harvey Rodriguez
from Colombia, is very real. Benefits of CSR are not only for society as a
whole, but also for the companies, even if they still do not see any direct
on their accounting balance. There is the key, to make companies understand
that they should follow CSR for their own good, because in addition to being
a responsibility, it is also the most profitable proven approach. In
Venezuela, the lack of CSR is one of the conditions that contributed to a
huge social resentment that has forced thousands of companies to close, with
17

22. all of the social negative implications that in involves, such as the
increasing levels of poverty, criminality, unemployment, exodus of
professionals, etc...Of course governments have to be involved in CSR
programs, but companies have to follow these programs not because they are
told so, they should focus on CSR as an important element of their
profitability. If Venezuelan companies had performed their CSR, our country
would not be in such a bad shape, as it is now. Unfortunately, social
resentment can be sometimes manipulated with obscure political purposes.
I agree with Jeroen Hoff regarding the comparison between CSR and quality
management. "QM is not enforced by law, but an enormous amount of
corporations has realized that to stay in business and to prosper they need
to produce top quality." And they really need to perform within frames of CSR
to be successful. I think that the observation of Janet Bohdanowicz about the
participation of "free associations of people of good will (NGO Sector)" is
very important. My perception is that a good way to promote an interaction
between the actors of CSR is through education. Education in the formation of
new professional with a view in CSR, and education to train organizations in
this important field of knowledge. More than promoting CSR as a law, it
should be promoted as a philosophy of making business more successful and at
the same time of building a more ideal society. Jose, Venezuela-Mexico
I want to inform that government should firstly understand that by the way of
CSR its duties are implementing by NGO and others. Only after that it should
take laws and other regulatory rules to encourage locals to CSR. But, when
government in Azerbaijan released taxes from companies which supported and
provide finances to NGO's in order to
provide such activities like CSR. Many companies starting to use that event
like escaping from tax payments. May be that is very funny but it’s a
reality. And at the end of that government changed laws in order to prevent
tax escapings.
That is why I suggested special board. That board must have juridical
background. Depending on it that board may monitor and regulate
implementations of government and companies. I think that it would be better
to create board which mostly will become from local authorities. Authorities
who will elect only once for one or two year. And that board also may include
some foreign country representatives, who will monitor that process. May be
that is difficult. But, if we want to make it work we have to spend efforts
for it. Only after that board will prepare rules and then control their
implementation. But that board will not have right to take or accept laws and
rules. All that rules must be taken only by legislation organs of government.
But, one of most important aspect is not accepting laws, but making them
work. That is why we all need that board.
Related the scope. I think that we must spent time and money to educate
locals to the CSR. Education or explanation of CSR must cover some aspects or
consider local identity. I mean, the programs which will consider social,
cultural sides of local people will be much more successful than others. And
of course after education it will take time for nation to accept some new
things and adopt this innovations in their life style. May be that event will
be adopted with some changes, but at least it will adopt. I think there may
arise different ways of implementing or creating of that kind of board in
different countries. Karim, Azerbaijan
In Canada, there are several Indigenous SMEs who were partly aided by the
Federal Government (development aid), that have assisted other SMEs in
18

23. developing countries in Central and South America. The question is were these
SMEs practicing social responsibility? In Canada we have several laws,
federally, provincially and locally that business must adhere to in order to
keep their business license, these laws are related to work safety, labor
codes, environment, and human rights, should a business abuse these codes and
it has been reported, the business is investigated and could be dissolved.
However, many reports never happen and if they do, there are times that the
business gets away with the abuse due to an improper investigation into the
matter. I have seen businesses get away with many abuses not only in SMEs but
also NGOs. This is not limited to Indigenous organizations but also Non-
Indigenous. Which brings rise to another question were the Indigenous SMEs
that went to assist Indigenous SMEs in Central and South America practicing
good socially responsibility? The only reports I have seen of these
Indigenous SMEs have been done by the Federal government who have assisted
financial (or aided) however some have not been reported and it is often
difficult to find the information because no report has been done or the
SME's are still in process of making the partnership a reality. However an
assumption could be made yes, as we would think that the Federal government
closely monitors funds that it provides to assist in such projects thus try
to ensure the SMEs are abiding the laws/codes. However, due to the complexity
of dealing with not only the Federal government in order to have a business,
there are also provincial and local laws that are not federal jurisdiction.
Thus not guaranteeing if the SME is being a good corporate socially
responsible citizen.
Therefore in regards to looking at Canada's Indigenous SME's that are helping
SMEs in Central and South America with CSR efforts, it must be a multi-
lateral partnership approach, there must be some sort of accountability to
ensure SMEs here have the resources to be good social responsible corporate
citizens and that they have capacity to assist SMEs in the South. In
addition, the SMEs in the South must also have a multi-lateral approach, but
their system is much, much different than Canada and that must be respected.
So the next question would be how did the exchange take place between the
Indigenous SMEs in the North and South? Case studies would assist in looking
at the exchanges more closely. Anita, Canada
CSR is a factor of competitiveness with out a doubt. Businessmen were
citizens before they started doing business, so they have a
responsibility as part of a society they belong to. As long as companies have
responsible business practices, they will be enhancing a much better
environment for doing business and promoting social development. By that,
economic and social indexes are transformed and generate much more confidence
that in the mid and long term promote productive investment (local and
foreign).
Under this framework, government will have also the responsibility to
generate public policies on education in order to make CSR, business and
public ethics a central element in the academic agenda. Amartya Sen expresses
very clearly that as long as the society as a hole is able of developing is
capabilities completely, it will be possible a much equitative distribution
of wealth and a much better quality of life. Inducing CSR is a form of
promoting the construction of capabilities among the weakest communities. If
private sector promotes the construction of social capital, society as a hole
will have blast
off that will make it very dynamic and attractive to other societies.
Harvey, Columbia
19

24. The composition of the civil society can include the media, NGOs, academe and
the church among others. I think each one as a corporate entity should also
develop their own CSR practice to be able to influence others to adopt CSR.
"In other words walk the talk". So one of the important challenge is
developing a yardstick that can gauge how an aspects of CSR are implemented.
One example could be ISO 14001 and the OHSAS 18001.
The Western mining experience here in the Philippines would illustrate how
the different stakeholders through the use of media sought to influence
public opinion. I have met the WMC PR executive and more o less have some
ideas on how they go about their community relations, public relations
activities. Thus one important driver is the media. This may include, the
tri-media (print, radio and television broadcast), internet and lately here
in the Philippines telecommunication via the short messaging service (also
known as text message or SMS). The media industry in itself have their own
brand of CSR. Everybody is committed to service and also the truth. Very
critical assessment of the use of media space may yield interesting insight
on the politics of media enterprise. One only needs to look into the
advertisement and the kinds of programs and the editorial
policy of their news and current affairs programs.
Another interesting phenomenon is the NGOs or the Non Government
Organizations. NGOs comes in all sizes and shapes. They are sometimes
called PVO or Private Voluntary Organizations, Non-government Development
Organizations, Social Development Institutions. NGOs can be a membership
organization or a group of professionals doing public contracting work. NGOs
can be organized by the business community to serve as their social
development arm as in the case of PBSP in the Philippines
(http://www.pbsp.org.ph). Given the highly heterogeneous character of NGOs,
they can perform a variety of function. Which includes: advocate, critic or
watchdog, collaborating agency, In the WMC experience, the NGOs played the
role of critic and watchdog. Using the code of conduct of the corporation,
the NGOs have raised ethical issues and concerns on the activities of the
local subsidiary (WMC Philippines) with reference to the corporation's
pronouncement and their code of conduct statement. The local NGO networked
with their Australian counterpart, arranged fact finding missions and
dialogue and disseminated information about the said investigation. However,
as a corporate entity by itself, NGOs (registered with the Securities and
Exchange Commission as nonprofit and non-stock organization) needs to develop
their own CSR. In the Philippines a group of NGO has adopted a code of
ethnics. The issues of transparency and accountability is also being raised
within the NGO community.
The Academe is still another important driver. There are three important
function that are normally associated with academic institutions, teaching,
research and extension. In the WMC experience, David Hyndman, Australian
anthropologist and also some of the Filipino anthropologist did their share
of research on the controversy. Their expert's opinion was useful in
clarifying the issues. However, these functions are not value free nor are
divorced from partisan interest. One only needs to look into the researches
on palm oil and cholesterol and how it relates to lobby against coco oil
imports/exports (there are opposing findings and conclusions). Thus issues on
ethics and morality are also raised. Academics can not use academic freedom
as a shield for their accountability. As a corporate entity that provides
services (degree, consultancy, etc) Academic institution also needs to
develop their own CSR or its equivalent.
20

25. The Church can be very influential in creating the environment for CSR. In
the WMC experience, the Uniting Church in partnership with the local
church conducted their own fact-finding mission and dialogue and
disseminated their own findings. Again as a corporate entity, the academe
also has their own brand of CSR and will need to develop their own CSR
especially the private colleges and universities. Church and religious
institutions can also have very strong opinion on sin products (alcohol
products and cigarettes) as well as birth control preparations and devices.
Thus, they can influence the market. The church as a corporate entity also
has their own practice of CSR. One needs to examine the back end, as an
organization, they also generate income, acquire and manage assets. They
charge fees/donations/voluntary donations (or whatever name they call it) for
their services. They run schools and radio stations. They support charities
and foundations. Some of the old religious denominations here in the
Philippines have considerable land holding. Assuming that they don't
accumulate income from their business operation and their operation is funded
mainly by the donations, then they should also be accountable to the people
giving the donation. What do you think?
Each one of us has a role to play in creating the socio-cultural, political
and economic environment which in turn defines the policy environment for CSR
to prosper. One need only to recognize the specific role of each stakeholders
and how they relate to CSR.
I want to underline the fact that components of corporate strategy are very
different in developing countries. I think that the role and the importance
of the private sector, government, civil society is different at the
financial level, cultural level, educational level and legal level.
In Romania, for example, now is very difficult to understand and to promote
different CSR standards a high level, because we have difficulties concerning
the norms and values, laws and regulations, quality of life. Moreover, is
necessary to establish an educational program and promote the CSR standards
through the complex organizations, because the knowledge is one of the most
important and valuable keys to reducing poverty. The rules are make by
strong for the follow-up the weakness (the rules are made by the strongs to
be followed by the weaks). In conclusion, in developing countries is
generating an economic and legal chaos.
For promoting CSR strategy is necessary to establish international rules:
first the support for civil society and second the support for private
companies. The civil society must to understand the CSR that (as) an ethics
and moral obligation and not that a legal one. The public sector must to be
present in the activities of civil society like a partner and like a public
service provider. The civil society must effectively decide where they want
to go and for that need the support of public sector and a good governance
for maximize the impact of their activities and for enhance the reputations
of companies, products and values in local community. Adriana, Romania
Pf. Michael Jensen, in his paper published in Journal of Applied Corporate
Finance (Fall 2001),said that "...Stakeholder theory, argues that managers
should make decisions so as to take account of the interests of all
stakeholders in a firm (including not only financial claimants, but also
employees, customers, communities, governmental officials, and under some
interpretations the environment, terrorists, and blackmailers). Because the
advocates of stakeholder theory refuse to specify how to make the necessary
21

26. tradeoffs among these competing interests they leave managers with a theory
that makes it impossible for them to make purposeful decisions. With no way
to keep score, stakeholder theory makes managers unaccountable for their
actions. It seems clear that such a theory can be attractive to the self-
interest of managers and directors."
Therefore, if pf. Michael Jensen was right, I have two questions:
(1) corporate managers really can't make the necessary tradeoffs between
economic and social benefits?
(2) it is easier for corporate managers to be self-interest when they have
multiple goals?
Secondly, as to the role the government should play, pf. Michael Jensen said:
"... resolving externality and monopoly problems is the legitimate domain of
the government in its rule-setting function. Those who care about resolving
monopoly and externality issues will not succeed if they look to corporations
to resolve these issues voluntarily. Companies that try to do so either will
be eliminated by competitors who choose not to be so civic minded..."
Therefore, under conditions that government cannot resolve all externality
(such as pollution...) and monopoly power (so consumers will be harmed)
problems, when a firm operates, it is still likely to generate externality
and monopoly power, and thus CSR is important for the whole society. But if
corporations caring more about CSR are less competitive than those caring no
CSR, corporations will not care about CSR "voluntarily", as Jensen suggested.
So I think government should have to create proper environment such that
corporations will be "forced" to care about CSR, by way of some subsidies or
penalty to corporations.
Furthermore, I think government cannot do the work perfectly, since
corporations are forced, not voluntary or altruistic to care about CSR.
Therefore, the pressure from the third sector (NPOs, NGOs...) is an another
way to force corporations to care about CSR. Thirdly, we have to let our
society know more about how CSR is important and beneficial to our society,
such that corporations will find CSR is strategic and corporations caring
more about CSR will have more financial performance also. Fourth, MBA
programs should contain more courses such as CSR, corporate ethics..., and
government should support these programs. Hsiang-Lin Chih, Taiwan
....Given the definitional problems of CSR about what exactly is the concept
and practice of CSR in its various forms and types and manifestations and
components and facets (e.g. social, environmental, community, political) etc.
and do all of CSR's various stakeholders understand all of these in the same
way?) ( and believe the answer to this is no)....and given the measurement
problems of CSR regarding how do we (whoever "we" as interested parties
actually might be with variable degrees of interest or commitment) measure,
assess or benchmark the current and the future levels of CSR and the progress
being made towards either more and more, or better and better CSR over time,
either quantitatively or qualitatively, and as this is achieved either at
enterprise levels, or sectoral levels, or at national levels or perhaps at
supply chains levels or globally or "in the market"... (and we do not really
have a way of measuring this either)
.....and given the "promotional" problems of CSR (who actually "owns it"
(what are its proactive or reactive stakeholders (enterprises, the general
public, consumers, voters, etc. etc.) and its various actors in various
places (including national governments, civil societies and the private
sector and businesses and within each of these broader societal sectors the
22

27. various actors) (e.g. national. legislatures or executive branches of
government or for instance academia, the media, enterprises, business
associations, trade unions, investment funds etc. etc.) and how these can
promote CSR ...through different approaches, methods etc. i.e. the
voluntaristic and mainly ethics based or codes of conduct approach, the legal
and regulatory framework compliance based approach, (not yet fully in place)
or the competitiveness and consumer demands and increasing awareness approach
such as eco-labeling of products or socially responsible investment etc. etc.
....and given the potential confusion or at least the cacophony of voices and
understandings and approaches that all of the above can tend to produce
...shouldn't a first effort be at trying to systematically map out and
describe all of the above "territory" as best as possible? (or is this
perhaps just a waste of time?) Our e-conference could be a first step
towards doing this. Is there already a good book on the above? A book that
relatively succinctly tries to say: what CSR is, how one knows it is
happening, who is doing it, and how it is now being done, and how it might be
done better in the future) If this does not exist who might prepare what
would be a "reasonably authoritative or inclusive" publication on the above
"territory" at least as things stand at this point in time....since CSR
notions and practices are also constantly evolving and progressing? And what
could be some practical next steps to help bring interested people "on more
or less the same page" (or onto a similar page) at least intellectually
speaking? Max, ILO, Thailand
In Italy the debate on CSR have been enforced since the Italian Government
has launched a proposal on it, this is an evidence of how can be useful the
role of public administration in sensibilitation. At the same time the
governmental proposal has been judged too invasive
regarding something that has to be voluntary to be really efficient.
On the opposite side we have locally a lot of good example about how the
local public administration (Municipality,) can mainstream the CSR between
the companies working in partnership with them towards a sustainable
development. I will try to synthesize our position in some points:
In a lot of local public administrations is promoted the Local
Agenda 21 process to drive the public policies towards a sustainable
development. Now is time, for these organizations, to pass from an Agenda to
an Acting approach, involving the local companies in improving processes to
implement local CSR.
In a globalize approach the national government in Europe can
just define laws to control the respect of ILO in the sectors of national
companies moved abroad, but can not be in conflict with national law
(es.China and freedom of association)
The government in the developing countries must, first of all,
work on laws and controls, then it can facilitate the income in the country
of the foreign companies, those have CSR tools. But we have to remember that
these Governments need companies (thinks just to the minimum wage
approach...) Marissa, Italy
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28. Week 2: Exploring the alignment between public sector priorities and CSR
activities in the extractive industries
The extractive industry sector, specifically upstream oil, gas and mining companies, typically involve large
multinational enterprises operating in a country over the course of several years, sometimes decades.
Operations involve large-scale capital investments, construction activities requiring significant labor
inputs, both global and local sourcing, and long periods of facilities management. Tax and royalty
revenues are often substantial but deferred, and though they offer an economic opportunity can also be a
catalyst for poor governance.
Interest is growing in the potential coincidence of public sector priorities and the CSR activities of
business, not least with regard to the social and environmental management practices of upstream
extractive industries. This begs the question: how can public policy be formulated to strengthen this
alignment, whilst ensuring that the resulting interventions are both ‘optimal’—good for both business and
development—and ‘feasible’—in relation to the institutional constraints of public sector agencies and the
value drives of business.
The table below provides a means to begin to look for potential alignments between CSR business
practices and public sector responsibilities and policies.
CSR Categories Public Sector Priorities1
Economic • Trade and foreign Investment
• Monetary flows to the public sector • Fiscal and monetary policy
• Employment and human resource development • Private sector development and
• Procurement and supply chain management industrial policy
• Technology transfer and intellectual property rights • Infrastructure development
• Decentralization and local government
Environment • Employment and manpower
• Environmentally safe production, products and services • National institutions and reform
• Environmental impact assessment and management • Health Care Services
• Environmental reporting and management systems • Education and youth development
• Poverty reduction
Social • Environmental protection and
• Health and safety of employees management
• Labor standards • Food security
• Corruption and bribery • Political stability
• Human Rights
• Violence and Conflict
• Social impact assessment and management
• Community and stakeholder engagement (non-commercial)
• Charitable giving
• Social investment
• Social reporting and management systems
Corporate Governance
• Rights and treatment of shareholders
• Governance policies and business principles
• Information disclosure and reporting
• Responsibilities of the Board
• Customer/end-user care
1
World Bank Diagnostic and Appraisal Tool – Version 1.2, developed by Michael Warner with input from Halina
Ward.
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29. Moderator: Michael Warner, Programme Manager, Optimizing the Development Performance
of Corporate Investment, Overseas Development Institute
Commentators:
Mr. Paul Kapelus – Founder and Director, African Institute of Corporate Citizenship
Colin L. Hubo, Faculty, University of Asia and the Pacific
Background Readings:
Indicative Alignments between CSR and Public Sector Responsibilities and Policies
“Results and Recommendations for Developing Country Governments", in Putting Partnering to
Work, Business Partners for Development (BPD), 2002
The MMSD Final Report
“Oil Production and Long-Term Regional Development, Partnerships for Managing Social
Issues in the Extractive Industries”, Case-Study No 10; Warner, M., Larralde, G. and R. Sullivan
(2003) Business Partners for Development, Natural Resources Cluster
“Development in the Kahama District (KMCL, Barrick Gold) Tanzania, Partnerships for
Managing Social Issues in the Extractive Industries”, Case-Study No
“Optimizing the Development Performance of Corporate Investment”, Discussion Paper,
Overseas Development Institute (2002), London
“Extractive Industry Transparency Initiative, Statement of Principles and Agreed Actions”
“Publish What You Pay Campaign: NGO Statements"
Key Questions Asked of Participants:
Where there is extreme poverty in countries such as Angola, which aspects of the CSR
agenda for upstream extractive industries are most relevant, and to which public sector
priorities do they align?
Is public sector engagement in promoting CSR in the extractive industries a useful
complement to a government’s poverty-reduction or post-war reconstruction strategies or
is it a diversion?
What can government do to increase the transparency of monetary flows from extractive
industry companies to the public sector?
What can extraction industry operators do to increase the local content of their suppliers
without undermining business performance, and what role can government play in
incentivizing this?
What are the roles for public sector agencies when partnering with the extractive
industries to broaden the benefits of a company’s social investment/community
development program?
25

30. Should governments in developing countries play in a role in shaping the boundaries of
corporate social practices in the sector? How best can this be achieved, through national
legislation or local initiatives?
In a situation where the credibility of the government has been eroded has an effective
regulator, is there an alternative actor that could broker partnership between the industry
and stakeholders? How could alignment of objectives be achieved under such an
arrangement? How could government build the capacity of the local stakeholders and
resolve the credibility issue?
How can best practices be shared with other mining companies? What is the role of
government in this regard and what role, if any, should the industry associations play?
Should the government be encouraging greater reporting and transparency of mining
company’s social, environmental and economic impacts?
How do you sell the idea of alignment between CSR and public policy to public officials
who find the extractive sectors politically unpalatable? Is there a role for investment
promotion agencies especially in presenting the climate for CSR as a way of encouraging
foreign direct investment?
Summary:
CHARACTERISTICS OF CSR IN THE EXTRACTIVE INDUSTRIES
Often, although not always, the upstream operations of oil, gas and mining companies are
located in regions characterized by, inter alia, (i) “big men” who want to secure the flow of
resources, (ii) weak local government, (iii) a lack of strategic social and economic planning in
the region of operations, and (iv) local communities increasingly aware of the weak alignment
between the conventional imprint of the business on society (in the form of tax redistribution,
long-term employment and related benefits, local SME development and local infrastructure) and
their own livelihood priorities. As such a large portion of the debate in week two of this
conference has focused on the division of roles between operating company and government in
enhancing the social and economic impact of extractive industries for local communities.
ROLE OF GOVERNMENT IN NEGATING THE SANTA CLAUS SYNDROME
There seemed to be a degree of consensus that the ‘Santa Claus syndrome’ should be avoided.
The commercial volatility of the extractive industries sectors suggests that operating companies
should refrain from entering into long-term, unilateral, commitments to community development
programmes since these can generate false expectations and community dependency, as well as
undermining the proper role of the state. Greater sustainability and reduced business liabilities
would be achieved where companies learn to partner with local government on community
projects, dovetailing their social investment programmes with the strategic social and economic
priorities of a mandated democratic planning and political process at district or regional level.
Where such political and planning processes are either absent, fledgling or corrupted, a number
of participants suggest that the company should seek to ‘lead from behind’ - avoid undermining
the proper role of government and yet play a transparent and graduated part in building the
capacity of local authorities to plan and implement social and economic development. This type
of ‘smart’ social (or more accurately ‘governance’) investment was thought appropriate for
countries such as Angola where good governance is in urgent need of resurrection.
26

31. Other participants went further suggesting that companies might enter in the planning process
itself (along with civil society), transforming hypothetical, desk-based, government-dominated
planning exercises into a shared understanding in the region of operations of a division of roles
and responsibilities for plan implementation. A sustainable Livelihoods approach was suggested
as a possible methodology for a more inclusive form of regional economic planning. Two types
of convenors of such planning
exercises were promoted: central government and supra-national bodies (e.g. the World Bank),
the latter preferred when corruption levels present a challenge to civil society participation and
transparency.
A word of warning was also issued: that regional/local authorities are usually urban based, and
thus lack the political incentive to engage in social and economic planning or partnering
activities with companies whose operations are in very remote (i.e. low electorate density) areas.
BP’s operations in Tangguh (Indonesia) and the mining sector in The Philippine were both cited
as examples of the difficulties of extractive industries
operations seeking to partner (or enter into joint strategic social and economic planning) with
local authorities whose planning and management capacity is weak and whose power-base is
remote from the field of operations.
MARKETING CSR TO PROMOTE FDI IN THE EXTRACTIVE INDUSTRIES
The conference hosted an interesting discussion on the role of both central and local/regional
government in marketing their CSR capabilities as part of FDI promotion. The example of the
South African Government was noted, where a combination of partnering (in the from of
‘negotiated policy making’ with companies) and mandating in the form of new concession
tendering criteria, e.g. black ownership, employment equity, affirmative procurement and
community investment, combine to enhance the overall social and economic performance of new
mining operations. At the local level in The
Philippines, it was suggested that a demonstrable capacity within local and regional government
to collaborate with mining operations in economic and social planning and partnership-based
social programmes, might also provide a basis for FDI promotion. The MODERATOR
suggested that despite these good intentions, in reality such forms of FDI promotion might be
wrongly interpreted as a disincentive to investment, either because such messages suggest a
greater exposure to commercial risk, or because it raises the prospects of higher recurrent costs
and fixed liabilities. Associated with this, one participant voiced the worry that such proactive
interventions by government might be seen as externalizing the social costs of investing, and
thus raising the cost of capital.
EDUCATING THE CSR EDUCATORS
Begun in week 1, the debate around ‘educating the CSR educators’ continued, with various ideas
floated on international dialogue and supra-national bodies for the piloting and dissemination of
best practices in CSR.
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32. MESSAGES FROM CONFERENCE PARTICIPANTS
The extractive industry is a heavily regulated sector because of its impact
to environment and people. Civil society constituent is also broad and very
much active. Thus, it is in this sector where most of the non-government
organization and civil society drivers are found. In the Philippines, one of
the policy issue that draws the line between the different stakeholders is
the conflict between the Mining Law and the Indigenous Peoples Rights Act.
Thus, the question raised - how can public policy be formulated to strengthen
this alignment, whilst ensuring that the resulting interventions are both
'optimal' - good for both business and development - and 'feasible' - in
relation to the institutional constraints of public sector agencies and the
value drives of business resonates with some of the issues being raised here
in the Philippines.
The FTAA issued by the Philippine government to transnational company remains
a hotly contested area. At least one of whom adopted a code of ethnics and
claims that the voluntary initiatives they are implementing as part of their
CSR practice. Critics however, dismiss this initiatives as expensive
community relations package. However, even as the company has already pulled
out their operation, the process of sale/succession and the expectation they
have created in the community remains an issue. I am inviting participants in
this e-conference who are familiar with the Western Mining Corporation's
Tampakan Copper Exploration to share their insight on the issue, can the WMC
initiatives be considered as CSR or merely an expensive community relations
package designed to secure the free and prior informed consent from the
indigenous cultural community to enable them to push through with the
project? Ruben, ADB
I believe that in addition to peer pressure (as mentioned by
Bohdanowicz)we need role models too. An example from my country is our
First Lady who is leading a partnership project (btw public sector and
NGOs) in upgrading educational level of society. I agree with the views on
hardships confronted in coordinating such partnerships, however, best way to
resolve them is to analyze reasons for partnerships. Public sector officials
need to be convinced that the aim of partnerships are not mainly to replace
what they alone are providing. Given the threat they feel due to
privatization programs, this is crucial. Additionally, the reasons for
partnership may be various. It may be to complement a service provided by
public organizations, or it may be to diversify a service provided. In case
partners understand this, they may be more positive in running partnership
projects.
*As highlighted by Ans Kolk and other participants, measurement is
another crucial aspect in promoting CSR. "You can improve what you can
measure" is a slogan we hear in total quality management literature.
The best way we can measure a construct is to identify its dimensions.
Being a multidimensional construct, CSR has been defined to comprise
of 4 main dimension by A. Carroll. These are economic ( I believe this
should also be added to CSR components), legal, ethical &
philanthropy. My suggestion in developing a measurement instrument for
CSR is one that incorporates all 4 dimensions within a framework such
as balanced scorecard. Semra, Turkey
We are beginning to build a picture of the actual role of the public
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